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TMI Blog2015 (1) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... At the time of hearing, the AR of the assessee submitted that he is not pressing ground No.1 of the appeal and has also made endorsement to this effect in the memorandum of appeal; therefore, this ground of appeal of the assessee in all the three years under consideration is dismissed for want of prosecution. 4. The second and third common ground of appeal taken in all the years under consideration is that the CIT(A) erred in confirming the addition made by the Assessing Officer on protective basis u/s 69 of the Act of Rs. 3,25,51,000/- for AY 2005-06, Rs. 6,51,00,000/- for AY 2006- 07 and Rs. 3,25,50,000/- for AY 2007-08. 5. The facts of the case as borne out from the order of the Commissioner of Income Tax (Appeals) are as under: "5.1 During the course of search in the case of one Shri Somabhai Ambalal Prajapati, certain documents were found which indicated that appellant entered into agreements with him to purchase various plots of land. The relevant portion of assessment order for A.Y. 2005-06 is reproduced below:- &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,720 512-B 3.74 21.85 81,71,900 509 6.88 21.85 1,50,32,800 500 3.49 29.51 1,02,98,990 512-A 5.40 21.85 1,17,99,000 510 5.10 29.51 1,50,50,100 Total 9,09,93,010 3.3 Rate shown in this paper is exactly the same rate which is shown in Banachitti. Further, on page No. 117 of Annexure A-22, following details are mentioned: Old Sharat 540 4.97 494 1.78 Rate Rs. 29,51,000/- 500 3.60 510 5.28 15.63 Rs. 4,61,24,130/- received. Navi Sharat 509 7.11 504 12.09 497 Rate Rs. 21,85,000/- 487 512A 5.58 512B 3.87 Received Rs. 6,26,00,250/- Rs. 13,02,00,000/- Received (-) Rs. 10,87,24,380/- For completed Dastavej Old+New Rs. 2,14,75,520/- Received but Dastavej yet to be done. Therefore, Dastavej of 9.82 vigha land is yet to be made. 3.4 This page clearly states that Shri Somabhai A Parajapati and others have got sales consideration of Rs. 13,02,00,000/- for sale of above referred to land. On the basis of above documents Shri Somabhai Ambalal Prajapati, Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25.01.2010 when confronted with page no. 111 of Annexure A-22, it was replied by him that on this page details of transaction pertaining to above referred to land is written. According to him it has been written by some person coming from the office of the assessee and it has been given to them as there was a little difference in total consideration wherein according to them the total consideration came to Rs. 12,79,45,600/-. 3.6 Shri Somabhai Ambalal Prajapati in his statement recorded on 25.01.2010 has reiterated that the amount of on-money received on Sale of land was paid to him by person coming from the office of the assessee and page no. 111 of Annexure A-22 was also working provided by the representative of the assessee, as there was some difference in consideration received." 6. After considering various submissions made by the assessee, the Assessing Officer made addition of Rs. 3,25,50,000/- u/s.69 for the AY 2005-06 with the following observation: "3.17 The contentions of the assessee along with facts of the case are discussed hereunder: * An agreement to sell (banachithi) was entered into between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sellers are not recorded in the banachithi. In this regard, Shri Somabhai A Prajapati in his statement recorded under section 131 of the Act on 14.12.2011 has specifically in answer to question No. 3 has stated that the land bearing Block Nos. 502, 505, 587,497, and 540 were disputed plots and thus could not be transferred. Thus, in order to honour the terms of the banachithi as the sellers had already received consideration for the sale of land Blocks bearing No. 510, 512-A, 512-B, & 513 were transferred at the insistence and directions of the assessee to the ultimate purchasers. * Snri Somabhai Ambalal Prajapati in his statement recorded under section 132(4) of the Act, referred to above, has admitted to have received the sale consideration from the assessee. * Further, Shri Somabhai in his statement recorded under section 131 of the Act during the assessment proceedings on 14.12.2011 has categorically stated that the land owned by them and agreed to sell vide the 'agreement to sell' entered into with the assessee were transferred as per his insistence to the persons specified by him as the rights in the said land were already transferred to the assessee vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant assessment year towards the purchase of the rights in the above mentioned plots of land which were subsequently transferred to the ultimate purchasers at the direction and insistence of the assessee. The assessee has failed to explain the source of the same. Thus, the amount of Rs. 3,25,50,000 is treated as deemed to be the income of the assessee as per the provisions of section 69 of the Act and is accordingly added to the total income of the assessee on protective basis. Since the purchaser of the above plots is not the assessee, therefore, substantive addition is being considered in the hands of the final buyers." 5.3. Similar additions were made in AY 2006-07 and 2007-08." 7. Before the CIT(A), the assessee submitted as under:- "From the entire material on record, it is clear that. (i) There was Bana chitthi dated 18-1-2005 on stamp of 19-1- 2005 copy is as per Page 13 to 16 & English Translation Page 13 to 22 of Paper Book I filed on 6-6-2012 in respect of Agriculture land the purchase in respect of Block no. 540/487/497/ 504/494/509/500/505/505. Total land was that of 157492.50 Sq. Meter i.e. 67. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at your that your appellant has not purchased any of the land mentioned in agreement in question of any payment does not arise. Banakhal money of Rs. 1100000 cheque received back. It is pertinent to note that there is nowhere mentioned of Rs. 1100000 cash received by them as alleged anywhere in said loose paper noting that of page 111 to 118. Of A/22 of sized paper. 2. First statement u/s 132(4) recorded on dated 8-12-2009 never speaks of any such payment by your appellant 3. On examination dated 24-12-2009 of Vivek has told on oath (hat he has cancelled the banachitthi since there were no compliance of any of the terms and conditions that of said agreement and he has filed details alongwith evidence in respect of each block vide his letter dated 27-12-2009 (Please see page 23 torn 46) 4. There after statement of Somabhai recorded on 25-1-2010 i.e. after 47 days of search. He has not laid any evidences that of payment made by your appellant (Please see his statement page 47 to 53) It is pertains to note that while examining Mr. Somabhai on 25-1-2010 and 14-12-2011. Mr. Vivek's statement dated 24- 12-09 was not shown, nor Prajapati asked to meet out the say of Vivek and. the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was received before the stipulated date April 2006. However the subsequent transfer of land are done up to 18-6- 2009. The deponents have not explained as to now it was possible that consideration (land) was not passed over even if the total amounts was received by 2006. VI It submitted that we rely upon following Judicial authority (1) P.V. Kalyan sundram 294 ITR 49 (SC) Page 208 to 210 (2) Unless the loose papers are specific (Not Vague ) Addition cannot be made Jawaharbhai Atmaram Hathahvala 128TTJ 36 (Page 211 to 216) No addition can be made in respect to investment in purchase of property on the basis of statement of third party unless documents bearing signature and hand writing of the assessee are found. (3) Smt. K. V. Laksmi Devi v/s ACIT Page 129 to 137 (Page 217 to 225) No addition on the basis of seized material in the hands of third party unless corroborative evidences found. (4) Saif Alikhan MansuraliV/s ACIT 13 ITR 204 (Page 226 to 232) If the year in which payment were made cannot be exactly as curtained. The deponent could not recollect the exact date demonization of notes, place where payments were made. In such circumstances the addition cannot be made. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate buyer, he did not pay any cash to Somabhai and statement of Shri Somabhai is false. It is observed that the original agreement to sell or the banakhat is dated 18/1/2005 and as per this banakhat, the first installment of 25% was to be paid on 20/1/2005. It is unlikely that appellant came to know about defects in title of land proposed to be sold by this banakhat within 2 days and stopped the payment. Obviously, the amount due on 20/1/2005 was paid by appellant. Similarly, the remaining amounts were also paid by April, 2006. Only subsequently the appellant came to know about certain disputes in respect of these the same rates which was agreed earlier. The entire amount of Rs. 13.02 crore was paid by appellant as advance to Shri Somabhai. Therefore, the fact that the deal did not materialize subsequently is not relevant. 5.9 In view of categorical statement of Shri Somabhai that he received full payment of Rs. 13.02 crores in cash from appellant as per the terms of banakhat the burden on appellant was very heavy to prove that statement of Shri Somabhai is not correct. Appellant was also allowed opportunity for cross ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land. The liability of paying premium to the Government before sale was attached to those land. In some ofthe land subsequently payment liability is of purchaser i.e. Mr. Ajay Patel, as premium directly to Government, in some case land Reverse back to owner. (iv) Further the banachitthi is not signed by all the vendors not their power of attorney is brought on record for such transactions and therefore to say that there was legal contract between the sellers and all the purchasers is not proper. In fact at the most contract was with Somabhai. Further they also say that in lieu of certain blocks other blocks were transferred. It is also admitted that through consideration of Rs. 13 crores was received about 9.86 Vighas of land still remained to be transferred. The agreement of sale immovable property is not like sale of goods and it applies to the specific property itself. It is also not made clear as to how the blocks belonging to other person were transferred to fulfill the obligation under banakhat. (v) The A.O. has referred to the statement wherein it is said that Somabhai has stated that some person from assessee's office used to give cash. However till today 'the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i has been able to identify the person concerned who actually brought the money from Vivek Patel's office. (xi) There are various inconsistencies. In fact Mr. Ajay Patel has purchased certain blocks during the period of Banachitthi. i.e A/c. year 05-06. If the amounts were paid by cheque has to be considered and only balance amount is to be paid in cash. The seized paper found does not mention the dates. There is no bifurcation of amount received in cash and cheque. Again as per page 117 the total amount of Rs. 130200000 is received in cash as per page 111 the amount is Rs. 12790000. if the papers are considered to be true they must have been prepared some wherein 2006 or thereafter .This amounts has to be reconciled with the amounts received from Ajay S Patel or any other person because the blocks were already transferred in A/c. year 2005-06 itself. In other words if some blocks were already purchased by Ajay Patel during the course of period of agreement there was no need for Vivek Patel to give full cash consideration as per Banachitthi. (1) The Paper on which the amounts were recorded does not refer to any date and also do not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 addressed to Asstt. Commissioner of Income tax central circle 2 (2). The statement of Pankaj u./s 132 (4) was recorded and it is first statement in respect of disclosure and dealings, hence it is most relevant (7) In 14-12-2011 Mr. Somabai has stated that they have executed the remaining block number sale deed also. However the sale deeds in respect of the following blocks lands block 540, 487, 497, and 509 (some portion) are not yet done. (8) The question no 8 is to be noted it is a leading question. The I.T. Officer suggests the name of Vivek Patel Again the person from Vivek Patel's office is not yet identified. (9) In Q 10 he has stated that documents were executed with the persons stated by Vivek Patel. However the statement is not believable as Vivek Patel is not confirming party. (10) As regards amount of Rs. 1100000/- please refer Q no 4 and reply as per statement of Somabhai A Prajapati and please refer statement of Mr Vivek Dated 24-12-2009 Q no 7 & its reply Q. 9 and its replay Q 10 and its reply Q No 11 and its reply. Mr.Soma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuing summons and recording the statement no question of this like are even put to Somabhai Prajapati and Pankaj Prajapati Thus due to the above inconsistencies the cross examination of deponents are required, which avoided safely since 20- 12-11 counsel appeared and Asstt. Commissioner of Income tax refused to give cross examination though the order passed on 30-12-2011 i.e. after 10 days. (xii). During the course of search the statement of Somabhai Ambalal Prajapati was recorded on 25-1-2010 i.e. after the statement recorded of Mr. Vivek which was on 24-12-2009 no reference was given to Mr. Somabhai regarding say of Mr.Vivek as per his statement dated 24-12-2009 and /or his submission dated 27-12-2009 filed on 29-12-2009 alongwith evidence. Alongwith the banakhat a loose paper recording certain amounts were also found. Mr. Somabhai Ambalal Prajapati has not clarified on the same. The statement of Mr. Pankaj Prajapati was recorded on 13- 12-2011. In the statement he has clarified that the amount recorded on the paper are amounts recorded on the loose paper are in respect of amounts received as consideration towards agreement earlier reference to. It is not known whether there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s nothing but oral say unbelievable alleged transactions. (b) No Cross Examination (c) Statement of your appellant is on record as on 24-12- 2009 Authority has preferred not to show say of Mr. Vivek ti Mr. Somabhai on 25-1-2010 and or on 14-12- 2011 reason best known to the authority. (d) There is no details brought out on records is such amount received by them on respective date what is onward transactions of said amount i.e. amount 18-1-2005 1100000 Where it has gone no such details brought on record 20-1-2005 31450000 Where it has gone no such details brought on record 20-6-2005 32550000 Where it has gone no such details brought on record 20-11-2005 32550000 Where it has gone no such details brought on record 20-4-2006 32550000 Where it has gone no such details brought on record (i) On facts it is clear that no prudent man will purchase such disturbed land without fulfilling condition as per Cl. 3 to cl 7 in fact they failed to satisfy the said c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it if lower rate of tax, benefits u/s 54G etc. are available. Thus he has shown the cash available as utilized against undisclosed expenses, Investment etc. Thus the statements are of interested witnesses. The other owners of land are not examined. There is no document which shows exact dated of receipt of cash from the assessee. The Prajapati are not able to identify the persons who actually brought the so called cash. The plots were ultimately sold to other persons. It is stated that at that time cash was given back. However the signature of recipient of cash or any such document is not available. Thus the whole addition is based on the statement of the prajapati. As the same affects the assessee the proper opportunity should be given to cross examine. Mr.Pankaj Prajapati and Mr. Somabhai Prajapati. Reliance is placed on 210 ITR 103 The statement of the witnesses clearly show that they are hostile to the assessee. Again the relevant details i.e. return of income filed by the deponents is also required for the purpose of effective cross examination. (xviii) In view of the facts material on record Asstt. Commissioner of Income tax has done great injustice to your appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uing with the agreement with the Prajapati's is also clear from the fact that he did not have any legal disputes thereafter with the Prajapati's. 11. With the existence of the overriding evidence against the appellant in terms of the agreement dated 18.01.2005 etc. the appellant had to discharge the onus of rebutting this evidence u/s. 132(4) but failed badly to disprove anything in the Cross Examination held on 14.08.2012. 12. Over and above all this a notarized Power of Attorney dated 18.06.2009 was impounded from Arbuda Bricks, New Vadaj, Ahmedabad during the course of survey u/s. 133A. This is mentioned in page 17 of the CIT(A)'s order in Ajay S. Patel's case. This shows that Vishnu Prajapati was empowered Vivek Patel on jf 18.06.2009 to carry out necessary legal matters in connection with the sale of land Block No. 513 (which was sold to Ajay S. Patel). This clearly shows that Shri Vivek Patel continued his relationship with the Prajapati's as per the agreement dated 18.01.2005 (Copy of Power enclosed). 13. It is clear that Vivek Patel is making false statement when he says in his Cross Examination by Ajay Patel on 14.08.2012 (CIT(A)'s page 35, Q. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (T. P. KRISHNA KUMAR) COMMISSIONER OF INCOME TAX, Place: Ahmedabad. 'C' BENCH, ITAT-III, AHMEDABAD." Encl: As above. Date: 26.09.2014 "No. DCIT/Cir-7/ITAT/2014-15 Date: 09/10/2014 To, The Honourable Member (Judicial Member) Income tax Appellate Tribunal, Bench"C" Ahmedabad-380009. Sub: Appeal in the case of Shri Vivek Prahladbhai Patel-IT (SS) A No. 128, 129 & 130/Ahd/2013- A.Yrs. 2005-06, 2006-07 and 2007-08- additional evidence to be filed-reg. Kindly refer to the above. 2. In this case appeal was filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mention here that this document was impounded during the course of Survey from the office premises of the Prajapati Group. 5. Since this is very crucial evidence, your honour is requested to kindly consider accepting the same as additional evidence and admitting it in the interest of revenue. Yours faithfully, Sd/- [LEENA LAL] Deputy Commissioner of Income-tax Circle-7, Ahmedabad." 10. We have heard the rival submissions and perused the orders of the lower authorities and material available on record. In the instant case, the assessment for all the three years, i.e. AYs 2005-06, 2006-07 & 2007-08, was made u/s 153C r.w.s. 153A r.w.s 143(3) of the Act. In the assessment completed by the Assessing Officer u/s 153C r.w.s. 153A r.w.s 143(3) of the Income-tax Act, the Assessing Officer made addition of Rs. 3,25,51,000/- in the AY 2005-06, Rs. 6,51,00,000/- in the AY 2006-07 and Rs. 3,25,50,000/- in the AY 2007-08, all u/s 69 of the Act, on the ground that the assessee made investments of the aforesaid amount for the purchase of 9 plots of land from Shri Somabhai Ambalal Prajapati, Shri Chandubhai Ambalal Prajapati and Shri Vishnubhai Ambalal Prajapati and the assessee could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the action of the Assessing Officer as, in his opinion, in view of categorical statement of Shri Somabhai A. Prajapati that he received full payment of Rs. 13.02 crores in cash from the appellant as per the terms of banakhat, the burden on appellant was very heavy to prove that the statement of Shri Somabhai A. Prajapati is not correct and the assessee could not prove that the statement of Shri Somabhai A. Prajapati was not correct. 14. Before us, the AR of the assessee vehemently opposed the action of the lower authorities and submitted that the lower authorities have not appreciated the fact in proper perspective and ignored the various materials brought on record by the assessee. He submitted that the fact of the case is that though the agreement to sale (Banachithi) was entered into on 18.01.2005 but the same was never acted upon by both the parties. He pointed out that as per agreement to sale (Banachithi), the assessee was to purchase 9 plots of land from the three brothers viz. Shri Somabhai A. Prajapati, Shri Vishnubhai A. Prajapati & Shri Chandubhai A. Prajapati; but not a single plot of land was ever purchased by the assessee. He pointed out that out of 9 plots of land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. Prajapati claimed to have received Rs. 13.02 crores from the assessee, but on 14.08.2012, in reply to question No.9, the said Shri Somabhai A. Prajapati stated that the amount was not received from the assessee but from various persons who according to Shri Somabhai A. Prajapati were from the office of the assessee. When asked to state the name of the person vide question No.7, he stated that he does not remember the same. Thus, the veracity of the statement of Shri Somabhai A. Prajapati could not be established in absence of identity of the person from whom allegedly money was received by him. 17. We find that the statement of Shri Somabhai A. Prajapati and the statement of assessee are contradictory. Shri Somabhai A. Prajapati claimed that on insistence of the assessee 4 plots of land were sold to Shri Ajay S. Patel and 2 plots of land were sold to Shri Dhirubhai Amin; but no material could be brought on record to substantiate the factum of alleged insistence of the assessee. Further, it is observed that Shri Somabhai A. Prajapati, in reply to question no.10 in his statement recorded u/s 131 on 14.12.2011 has stated that the amount received by him from the actual purchasers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous year relevant to Assessment Year 2005-06, Rs. 6,51,00,000/- in Assessment Year 2006- 07 and Rs. 3,25,50,000/- in Assessment Year 2007-08. As per the provisions of Section 69, before making an addition under that section, the onus is on the Revenue to bring on record the material to conclusively prove the factum of making an investment by the assessee and only thereafter the onus shifts upon the assessee to explain the nature and source of such investment. In the instant case, we find that the only reliable material which was brought on record by the Revenue was agreement to sale dated 18.01.2005. The assessee has not denied the fact that the agreement was executed by him also. The agreement only proves that Rs. 11,00,000/- was paid by the assessee on 18.01.2005 and agreed to pay the balance amount on future dates. In the facts of the instant case, the said agreement does not prove the balance agreed amount was actually paid at any time leave aside at the stipulated time. Therefore, in our considered view, the agreement is a material to conclude that investment of Rs. 11,00,000/- was made by the assessee on 18.01.2005 and for no further investment. Therefore, in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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